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    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
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    6 views64 pages

    EPM Sumedh Publication

    Uploaded by

    Manoj
    EPM

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
    Flag for inappropriate content
    of 64
    4p UNET=4. -_ —= = “il i 1 : incl ! ‘fix i %% Peafeomance Manage! » 1 ' “Y to = frost | the HR feild: 1 = objective is to assessrennt $l “eevias $ peofeumance weed pay | S Natya! paocess of rrarasenit Leentsibutes to the effective _menasement of incl 8 teams to achieve high revel: Of. cog, pesfour ame into use oF e@ —engeing . continuss poocess of coromunicating 4 claei fying job eesponsibilines » pai £ perfeorrane expectotions - * Definithen +> his Sef of puccess few eo Iiching» Shaved undesstanding isbout whet. 1s: to be Schiewed and managing & seveloping people in a Loay which increases the povbubility thet ir will be achieved in the shast anc longew tezm - @ || Need oF Pesfosrmmnce Management +- — To encble employees towasds achievernent| CF supeziow: Standasds . — Je help employees _in identifying the Raecledbe & skills cequised foo peefourming job- — Boosting the pesfoernance - - Encouraging empoyee ermpowen rent — Zrplementahen of effective sewand rrechaniom : - psvroles personal oeowth. _ peometing TKO- Way systern of cornnunicatim - = Tdenhfying basses je = premotons $ pesfornmare based pavroeDell @ ile control & opewational contol 4 Mrs ¢ Manaecriarh nfo - ae) = The tree levels OF Management| achvity = McS iS usedias tool fox.) contsolling in adminsteaton, it helps monagess to find infection and peafowrmance of ermployees:. Both financed £ Nom ~ fhancia! hnéasuve of -pomfosmarce is necessary. | ——— @ es) _ Peafoomance | Eyaluation Fever i= I 1 3¥ Responsibility Accounting’ Responsibility Responsibility Peefosmalice. Accounting centse Measunt: 2 Revenue/ income + finontiol . 2- Expense /cost 3° poofit - Nen- fipancial ++ .mmvestrent, : e Sentral rect ) I E Pesfoomance Repscting xs tnat type of managemel accounting thet ‘collects and stepasts both plamed end actial infeomaton in teams of sesponsibility centres * z — The emphasis is laid on the esponsibility Of the pewsons handling tpose cost combo) teols- - Zris pact of MIS 6 ~ Px celating te seyeoue , cost 4 pooht in vespect to indivivel -sasponsible fir it- - Aftes complitaton of this deta is teansfered +o the next highes management ix who can take necessquy aches - level — mputs§ outpurs Ccosts Ecevende) 5 ay - planned & Actiel Ife - ) fechises of = adent fication oF Res: cenbes > Responsibility — Frans Poicing Policy ‘Accounhing = = Pachcipahye Managemen ; OFF cviectves oF Responsibility Accounting :- = To contol costs, vevenue & Anancio! zesouscs = To detesmine the contsibution oF Res. cenbes TD motyate supesvisoss * valuation of divisional pesfoernance - TO pinpoint aveas of weakness: To assuse management -sF goal, at Psocess /steps in Responsibility Accounting +- Divison of ‘corppany foto dept: € navanrages ll) Detesminaton of ohiechye) yey! cEMpePyeS pee foormance + Recessed Achial Peofsamunce = HelpRul in cosh | planning compavison OF Peofoormrce 1 | - Helpful in decism| rooking ~ Assign RASPINSIbINY = pelegaton 4 contol: calculate the Vosience coseective Measuze + Dis- _Asiemtages &- E los Ipieereutt Paces fiois s91H — Requise rove SEE CeffootSs peeves foselevant info: = Time) consuming « = . Gp ) (AS) ‘te [fF coset cena fin tie jet ips el = ‘ - A husiness ongeniacthon a Viclecl into Merotous funelional unihs ~sofermsed yo as sesponsibiiity centres « ; - Arsnages i antrusted for oF PAR: & supenyising -he conte 2 cepts —r 'Reteo rreclewien! y kethourt ) ayer heat pete: pubs eintanael gorde : as against thé ae oF saspenaibilfiy ae ® ergsses i in sewvices e-g: accounts, , Hnarce » ddveat|pernent HR, etc © ieee Up SE Ragen ies Si auras ead Group of Wankors [_vicokes L pective.. oF TRaspensibiiiy cache canis | cents CO Teee eHpvension \ CRor eect ni XY Tovesirnent contsibubiem} opesating promt, cle) 7 47 Revenue / amcome_centse = output i measveed in monetasy teams sevenue © peofit Rey. conte) budsets - e pooducts or ‘sesyices — pevcucing / opecsting centse — scle objecive weyenie- €-g- Regionel Sles mManmgen 2) Expense cost Cente §- eno verusi! 7a 1 Eonpre Tpbclaction- OD »SeayIcey functon, achvity a to cost unit” whose cost) may’ be attreibuted cannot easily rreasuset — fixed budget 4% mantimbe our puks Je. pwoducts os seovices ~ A cost centse may be loceadim, pessm , ttem os equiprent - i) xrepeasona) scast cente C Loaxtcr 7 item) ji) pessonal cost centse .Cpessm’) h_cogk —=——-» 1) openatin - functioned il). PICA Cost poe ad N® service _cost centre. lly Ten . ® spncilery Manfaduring = No feernal aiterept iS made +o weiate input to output - IF expense as redched wilh = Acts! sales measweed against ~_DivecHy tvesponsible fer pooduci Is moadmbe Maoketing goganizahens & nob isechy sespomsible fod. pooftts AE ETT ORE aK races of 1) Recoyesy costs he Wy oun = cost} rm ro Ensineesed = —__ committed aot design al c centre: once the. design is final it stihy prepsrtanc! to the output volume + = Managers focuses am to the pee § efficiency E-g- Pwod cost: centse: might measuse * = bisect labous urft '- Glectaicit¥ as fuel = ‘Lead cost pes batch Activity cost He chavactesishes OF g. — appuds peacwed engineesed cost centee - outpuks in physical 4 - Arpount of fneut wequised fee ene unit of output can be estab Ss Man fachusing, trucking etc i ge CA EePGASING, > R) Discevethonasy cost \ centee 3 - Manaserent Fas qected on cestain . policies thet should gover the _opesations of the company : u e es: Monfachiveni moy. grant an adveshsih: SNowane +o 10°. per 1900 pieces foo cisteibutes| < Tincludes “4 Uminstsadion 4 .suppost sSeoveces, R&D most maoketing achvites ~ Budgeting is _inosercentel.. r _ ut is senecally diffecence bet? the budseted input $ achial input - eosts. ae, ipswcotest oats Geet deo Fleduclions ; ; — ey ii)_committed ~ These costs ace 1 cost > sunk costs centre : — The exists as 5 225 ecisfons although tte chazge b= ——‘commi-Hed by -rranagerresk - (Of owe ir — conmittek oss wil) catinue @ S7__ Peont = -_ segment of -busiress- centre = Responsible! fox the cost jncuvs as well as seyenue- it genewaaes nes at h — SC .. | even if an osganinaton shuts down fer set tire | ~ Haye opesationad independeme- -~ Manager is free to make decisions - Both -seyenue 4. expence mmegsecd, Inte the somonetasy = teams - + bean Maeketing. Z @® Functions! unis Monfosueg _ Ssewvice 2 SEPT 7 @ cthes caganiactions - “ — At least two! units — Manages is consistesable =) peofit ce pasted 10 top!) Management] _ Measuses effechyeness 2 emicieney cf manccee | 427. pve stent ~_ Ht is. peodit. cena 5 2 cance ——> ~-mrpots ——> Expense (costs: — cutpats ——» Revenue /Income- — Asets employed also. measized - Rer is used. @ ROr = am cme of Best. cenke e : Asses of tmvest: cenke- *@©@ RO ——» The excess of incone beot EA Residual the vequived wote of wehyen on AEDT — central component of Mes { —F _ Ganciel & Now - financial l = - fow rranagess rr is. y used in Ok Financial | Reafasimance SRE CResiusl name ai decisions about | “\hete ciy galawies ,banuS + futuse ye BROT 3B) ROA 4) EVA &) MVA 6) puo Rmt Analysis + Measuses > _Non- Financied —— >» 1) Balance | Scosecazy @ __pevfosmance Measuze 2) Mclcolm Boktaise ' Frame week CMBNAA wa be coves & above higher than cost of capited Residual ancorne cri) =- —<+ fs the excesS OF Income porfit oNed. velquired, pots of zetten on the investment - = xHcome / profit is. desized fo investment arr « Rex = Net epes ating — Minimum 4 cENcome Re quized cImcome- _ 2% C Advantages) age Cpls - Advintage = Minirnum setron-must ecrmed. < — Shoot aun = Minimum wate oF Return ovientah4 -— piffesent assets , diFesent 2efuens = Divect cam paytison — Game asset, some vehien . is airReu} ie Leads to goo! congauence — Apantute Masuee — oes nor =a = wipe Pen avious. N eae =e C Retuen on Investment —__Retusn sn myested capital — Teta capital divided into the Sempany’s pse tax income « Ror = Net opesading Income pop» Mawgin X Avesase opesatng Assis TumMaes e Mawgin = Net ope- rmcome, sales = Turnover = soles Avevage ope! ASSES } - simplicity) 3€ Dis- Advantages ?- - consistency } Advantages = Manipulation possibl = sanifecraity — powe meqsuze- 2 i bbe = =~ chancel acter _- oiFfecent bases for —_shast team peofts ceormputatin of pooht 6 = Mars mitiatve - Investment : =o @ & @)_Rehren on Assets = EF isan Indices SF HOS Cc ROA) ——> oruee a company selahve j ; Tits. jtetal “Assets - = How eatiae the ee uiusing Sssets ifes eacnings - 2 coprolv Annual Beoning 7 Ror Kore Asselq — disploered as Fe ‘ROA = Net mame +° mntesest bis - Advantages ¢ = Total Assets _* Advan pra -Gasy calculation = same ‘industry = No indian pe = a compaced a ean = suey = cod “niegpal Mat — = sole tp, - Used fn mMesger 8 Acqusihm . No welts — stesn stewact oO é $—> = yore) Macket Total capita) Nae Gs Ts. Z Yalu [— CAdy-) CANS Mya Co cveated Geal — fevecast econsmic © DiS - Ach profit - _ = Oppactunity cist = Readily communicated ¥ ~_fntesirn casi undexstood + werumMs = produces Sevies of itayets = Net calculated — Impose poofit tse Hevel. IS) Economic ——-» = Estimates ‘Company's ue Value Added Céva) economic PeoAr 6 - tis vesidual income oPrex Shasging “He icorspany feo the cast (oF capltal proved by \endexs 4 Shazeheldess y oio\ i bye i the ___ = — ~ finance! > -retentify ——_ > pekeomine data fot Necessary companys Adjustment coe _ + calculate 4——— — colawiate YAS hoa a .NOPAT © e EVA = NopAT - capital charges 1 % Advantages 3 - ' Ok Diss ACHAT - Ermpowen ernployee — Foils _rmeasuve tt — A\locehm of Resousces impact of TnFigthon - = mdission into shaegies su tir Biased + Eliminate confusion |! _ = Affected . by | =_ simple 3 fasy 9 aiceounting py orl je explain l= Accounting 7 al distechon gia] 67 Bu Pont yy ISI ae - F. Donaldson Boown = DUpant felentity \) opesating efAcieny - ; D asset use efFiciency 8) Ahancio! leverage 1 a — Less useful fs banking — Dupont analy sis pel’es Upan the saccounting identity - jy) High tumoves J levesase/ Mazgin incdusties e — Ror 4 RoE sk Dis- Advonyase Advantages = - — Shot team || _ Good tool +o teach people - Measure rn: = Linked te corepensaton — Bese fox% schemes - — passed on & bing — pees per tink fo e coc , WM, Value: Ls *& Umitations of Rnancial Medsures 2- — piffrcult to quantfy monetacily such as lead tire weducton, customes sesvce, quality in) — Repoots ave usuclly poeduced rmanthly . —_pre-deteomined inflexible feomet _ Lack of zelevance fas contsol oF peod?- - Excessive use of Ror also distosts enesgy stategy = TPeoditiona! ccitesiq Guch ds cost efficien Ta @ MW ir utilisation may pressuze mapagesS =: =I ~ Financial rncasuwes clo not vepost accutately - — Not always applicable to new management technique - = Not pendlise oveerpooducton = po not adequetely jdentify the cost oF quality - Serer neti eennr ee CrnestLarE erm 4oi-Gc- EPM Entenpzise Pecfoorrart Managerrenk - 4 UNZT-2- + Non - finaneial Pes foornance Measuse *- — Any quantitahye memseize Of el ow entt pesfasmance canner ke evpoceses units ~ Thee on inayie=s io rnonetery peePeCTIeIre ATSIC: Tee FEF - Non-financial non: financial info: both Wiecrel £ exseztol.- based 0? Hoof new patents develop Eg. customen satisfaction - Govt policy’ ere” %* Non-financial Aceas 1) pooduct Guacantce ” include ———> 9) Aftew sole SeoviCE * 2) amncyaton in pooduct +) gust in time delivery o! design goods - S) Maaket! Reseach." 6) custerree senhiments 3) HR management - 2) Week culties a): ceganiastone!’ Zt is Promewoak thet transiahs Lon osganiactions slatesy nto cleas objectives) measves J i _teegets: LD iS teaditionel financin) measire- =Frarciol messise tis Shad — fuhiwe value though Past events, investment in long investment fn customers 5 teorn capabilities $ customer Suppliess, employees) zelationship were nek caitical peocesses , technology Fox success * € inadequate). and innovation 2 ate ‘ - BSC is a business rranasement peocess / concept that tsansPooms both Financial §-Non- finance) date. inte the detailed madmap ! =_Helps entezpuise te measyse the pecfeomance ¢ meet ost $ lang teorm objectives - Tt peices feedback abnut beth intemal peocess § exteene) outcomes! o. Building BSC % Process OF Balance Scosecasd t- @)_zToplementing Bsc oO Assessment of organizathon Se yeation oF sisoteait a y ee sdonin Development of ovesall Business Measusement oF ao stootesy PSs toon Decomposition of business REF Comin steotegy - . ee *~ Phase Tl te CPA plecrenl vse ene reread + aig | 7 eon (hie phase mrgemiaetiene herlanes seoneecisd f& fuwthee bapken Ino elepevatrrantel level: ot Fora Peanpoctive ef Retencect Seawecermiel & Finanetal ter} ' — * tiie Mision Tine cared eliieary + id Business -_ a l {aoces cuslomen —| ‘Leevening A Gratiot C pnorrhian ) Th “baleneeel Scomecerse) Ghoulel ibe weecl eae »_ Inferring onc! —Senrrotiing | ayclety iv» lecraning systern nebo | Pesspective : SS = epersating ines ___ @rnplayeet “and a A ‘ company's Staalesy Fenplelalien crcl “ero clin “ane _contei bali: y the bottorn Nine eas ‘ . nO Rovere Grep.nth # 3 cae + Recpen m eclectbnahis wath, exfatin extaline CUSIOrA - wn = bung ati iia pas ® povelu ctv ity i z _axpprovernent, ——% : at) customers = custome’ walistachon y - Maske | ectiye 7 Ctlstomes rrentethion : shaze | Ps ~ customer aequisition _ Account > Susteren profitability + Shere - “custores Sabistaction leads to customes loyelh ans trspush worse oF mouth + j ' az) _sntenal - ee t ( Business) Povcess the mancagees must fdentfy +be \__pewspective x inlewnet) process that cee couciol . 40 thes oxanealim aos “= "That puocess helps +o. dehver Mpesics Value to cuslomess 4 sichieve financial taxget. S¥ objectives oF . - ¥ Poveess pesspective 1) opesating - Acquising wae meaded () process - padclucing 4 sistibuting 2) customer ) Select ’ Finishes] goods © Management a) Acquive 3) Mnovedion — pwocess prvcess 35 'Retaln AD Resulatooy ! oan 4) Swew Business | § social puvcess 2+ Epyisonreent- > Health & safety) - Emploxrnent porches bs 1 bine 4) _Lecsning 4 Gwowth = This pesspective wooke ot the C Innovation 3- abilily oF ernployees , quetiiy of info pewspechye) system Sooxg~ Sippy. ‘ While three pemspective felis where the_osg- stares She fousth Seis howd to be seh These “ip futuseTheee ciimensing ——-p’ people, SrSiem, cag. s_ebjectves ——> HR, xr, osg- cuthne & Alignment - Advantages CC Bsc) ~ pudgel decisions ; Sredesy ime goals “separ unicates Stectlegy Dis -Advantases C BSC) ~ tO poh ~ Takes Hime TY corem = ~ Action > Nek fly eFRcient mien S 9° a SGSRR | —-boes nel pewvidle - 5 “ecormimier stay ~ Resistance amin onern 7 P ee to yo clot From emnployecs « me EO MENGA — MENGR Award 192F ( Malcotn Baldzige—* > ,,., r + eiccire Enldxige Matorel Framewerk) Susi Fae = Lord ) U-S- csgsnisathen in q- Award ig > Educcton saris = senice compeny = ecithos a Wee SES Cert = smo! Business — 1¢ awosde given nent SS SSS onnuclly fer sk difrerert catesozies - = rt promotes aworeress OF pesfSurrarce: Ferrey) excellence - < _ Malcom Baldzige Advocate oF cuUStt7- ~ U-S- depsetiment cf cormrezce- _ upto acto CSI aes eecened This sea) *%& Featizes OF - poemetes qucdliv - Scilfieks ores MBNA =- Soe = comducts by Kodirs ~ — Holistic cet of eepeatise Cemin 1) Leadership iy aa ~ Senios executive Legdeschis” ~ Leacesship systen Lagsanteato? ~ Public 'wespnsibility 4 citizenthip || ¥ 2) Strategic Ue, a = Steadesic development . P INQ, - shategice Cepioymenr oe = customes maeket J knowledge © = > _custeres satsfachon ~_susto res Relahenship Management - | I 8) Masket & customes i _) Info: Analysis —> Infeemcdim 4 cedar > corpetitve compasism 4 enchmaeking — corppany’sS detg= 5) Hurnan Resorece “HR developvenr 2 plaming 4 evaluation. focus ——>» ~— Emporee -proining, education 4 sohetachm- ~ Weskfonce Sysiem : a 7 ©) Povcess __y ~ prdchicts 4 senvices Manasement ticliy, lesions | selivesy » apples vey povcessed - 7 PLL psocuct S-seavite Quality Resuls L- HR vesults | Ste custémes - Francie! sesuite coheed - | y : a se Evaluation pimensions——> Appeeach Aavantages SET Dar BIS= Advantages -_suistenoble cesults - = Welps in think stealesiceliy - Helps amevican companies to Fropaye quali pmo ViIy ~ aivision based only - Teo expensive oyes adyestisernent = Naso Pals 7 Recognise he Schievernent > ammersernentad irnpyovema) . Helps companies clin povsess, | _- Award sesessa - SCO alee pe. awasd + Camiin K Strategic —A Folly fiancthoral unit of a bu: Business that has its own vision 4 abeecton - UNIT = x4 is an operating divisim of Alem cshich c sav) has clistinch povcuct - masket ceg rent — A well clefined’ seb of " custunors / geographical cmeq - Need of sSBU:- | Linkges With ERM. 2) conduct asment situation analysis 6) Create vision "a) pelesmine, planning hei2cn . |) pevelsp Shales 3) Emisonmentsl scamming t 8) Create BSc “A) Key Glccess Fadus - - vse; Talent -pactics J iniebves 6) Gap Anolzsis KPI's” 18) Execute Strategy. _ I C Advantages) C Dis - AWantasssy —Betrer co- osctinetion + - ahosease ofesating cost "2 peeuved Accountability =~ Reduced “Aexibility = Becentealieahon of auihenty =: ~ Unwanted conspelition "Lact foomulotion S ehecive Seis pas r : + Katan of Swaleay E 1p avis ireplernentation Gap i dvicens } Head ,—* Gal = then an oxganiaction's igécls coincides __Congwuence with the pessonal goal oF Ts the anager : 4 Camiin - wh coneyaenee belioeen fnetiv(ued goals deat 6 aniaatimal Gala alone nob -entabs + i « CO A pyeancrger mew expech era high Galery as é en they, canoe pul ensgemlan (ie : tnnak eektnael bel? eaten hms: g ¢ se anfowmed firctows Pheabh afteck , o Qeal eangsuence ts ; @ | anal fayctovoe pb eeoanly ethic = Atytuede: ¢ \ = Naame, bebavints é Leyally 9 Lacal @inployre > é I By anieanel Fachyas Ye cutlhrre ——S | = Management 6 ENP neal ens “6 =i pemeesption *__Fowrnal contwol Teh fo the Gteuchiwe j pole’ aysiem ——r poveceluaes ‘to be Followed] by membora of esganisahion. rt fs the eyslematic anat wclouchives, policies 4 pmocectaes for asganinchon. @ Managewen Gail sysiem fesmal canto! Cantos ie geal eysien tua 7 = a _ ee eC quldes / guidelines & — @D_physico @_Mamels: paver) system ever geratvo - 1 Rafaguiarel —— 0 pais ve) @ Tack control system —————« ae ‘ontrol Eyatera “focuses Upon Fhe needs of & at to | ye Gub- sysierns OF pa nas ernctAt IIE A COMPRA —— 0 — fesrral corms) ——— ys Highly elivective agnel ec system” crave) High) pemtielpanye ss aroma ge . _ Pours ‘ . 7 ERP ache ; Ge rele Sg SS foornel cmb ol proces 5 inpegrertions meyCamiin . e AL Ternstes ¢ an t We pares ot suppres Sewice lowest by ane profit ‘ centre oF business en ly te + Lenethos poet centre of ‘same emtty : such govels ae ~ The value 2xpmaccest 1 mevetesy teams: ~ Te tbensacthm OF tfensfeer OF gods and GEAViorns fram ane conte +o another oF _Same corppany S obes company tansechiak? *&Panametess_ fox = Sheutet net hee fRina TR —-—- - Ff * the esalicehon ef cisions Me TH ahyechve manney yp pe aynchsonisedian \coih the = Mot pricing any > onesaall objechvas, OF avaanisahon ~perfeemance “) Raluato . = objeckyat = optimise Branca DESOVTCES | See - Motivate manages ‘de. Gactows jn selecting T-P- —Goal congsuence * Cl a spesfiermmance Evaducton senling tivision = Acctonorny, = conformity ith pS oppostunity cask sequivements™ YESOUDEAS + a constraints /- Maximum Linit : 2 : problens 2 — Lowest mankeb pore = Umited mass at wohich buying division aaquire | Excess / shortage Exes sss a capacity + _ Camiin A AE ea Se QAAQL +& Adiminstedion © Negotiechn - of dy © Asbitreti¢ 4 confirct vesolutin - Tansee . : prices © _Procluct classificahon- q i) Those _poocluct whose TP 111) proclucks | conpolied by produced outside 7 TP Management * Gornpany » % Limitations i- — Intew conplie "aniong epactments : = co- oxdinahon among divisions , Lolack of cultuse- - 7 x Methods oF 1 +» 4) cost Based Teansfte Paverng- (Transfer Pricing 2) Masket Paice Based 3) Negotiated 4) puel’- renee @ cost Based —» - feo finished =o Transfex Pwicing — costs {ncusred by the selling party in manfachizing the qovds 4 SEn\CeS * = Macket Paice is not avarlabe~ = Dieweuly in deteomining masket Price: — pwoduct manfachrsed is of Seoset nahtve- ob tax, customs qre usee +thic method AAAAAARARARRAR Methods oF 7) © Actual cost of | Pav” a cost based Ee — simplest: metbocl: Transfer | —_ Seo AT Centre - : ring = Respmsibitity SF pmth pew Poemeuxe te cenfsaleedl Tee, @ Vasiable y» proect matenol, fabouer =: eost - Naziobe overheads + @_cost__ ys | Achial Sar Sr, @) Gtandasd OF sales PSSi+ selling of Fit CosF & adminstsion OF gods + & oppastuarty co = Ful) cost oF sve + 1LeM Based - Soles plus some ‘ SNe = ‘etd. Variable manok up ow an aljous ance, cOSr for path: en vost — C perfect e+ capredtiak @ prosetting Based Compettive Mazer), Tp —> _ used in’ specio} Sruahon x Advantages 6- ~Gadup as whole: benefits from dang — cost infos is the Wwosk Internally yatheo availobe under than exteonally. V the accounting Syste 1 in yosue, bY MAC %* Dis- Advantages 3- — Tune with USGAAP —_No encousagement for - Encourages Cost centro) - manages oF foreign = pefeciencies bet”! selles ) buyers ae) of divisions - ~_Bivisims ave considesed as cost centses het peofit centwes’ t Nie @® Maaiket Paice Based Transfer Pricing % ~“Tansten of goods § seyices takes place ot masket paces - -__poices we decided by mazket forces - = bemand -E supply? position) a Wile ug : 2K Advarrrages * - = Show enh7 of gods T eeavices Peat = peeuable to : in Competitive masker : haye, — open maaket, entry. { discounted = —__posfebitity of ‘division: y's) on Tceker ee %& _Dis- Advantages ¢ - mifsparistt — pata collection is challenging task. - prices Gre volatile: Valuation of stock Gn maatel Proce” : Camiin Keach Man et ® Negotiated 19 ~ Peefsion on povelna ‘oP govds J ; serices on the bests of So negotiations hele! beluseen he buying A welling a N71 a Tans (esor “8. Hransfeme = Both the divisional head whauld be Saal ith ~~ gemplete datay they both have IiWonly te. ctead “ Aevontaget= 3K Dis- Advan tagas:- = Audonomy of clivisions - = Basgetining skills a cost! puice » eliminated - = Low eapactly cabhsekon: — Bettes | communication + = dame cansuming ~ TF failed, leacks to om Arch @® pas! Pacing ——p» No cindle Wansier p E used Eg: supplying divisim ——> Maaket Price Buying divisim ——r Yareble cost. = xt {s_complex method - — Adjustments haye +o be made centrally = Faciledes igoal cangsuence +: -. competitive paces. - peaformance measuzement oF divisions is: easy ¢ fo) ‘is betng- 1 3 Applicability of Transfée Poicing 3- @ xIMItemational Transaction. —- \ @ Associated Entexpoise - peared ~ C26 °/. Shaveholding ) entosprise | @ ___pomestic_Transactim - ior A= wich oa \ 3k_A bank is a Financial insttiton Whose peimany activity is +0 act as aq payment agent for _custemess 4 bene & lend money. j 3€_ Banking company ——> ©* Any company whith -unsacts -the business of banking in India”. 1st SE Pesfeornance \EValuction Pasametess fos banks’ 2- +) customer Bose 2 NPA © Non-Pexfesming Assets), 8) _ beposits 6) Bank Spreqal Renee 4) Ror: 1A evedit Appeaisal. 5 5S) Gharcial Imctucim | 8) Bank “Investment S) CAMELS Appsvach = 3K +) customer Base 2 - (enincr: - public, poivete & feseign Banks = sustomes base is.@ pasametes by Which the banks anc bans gG=pups compete with each othes - (= Metpo puspose isto impeove custemes base - ~ Based on pavametess Sth as customes peofile , ctemogwaphy » customse sading 3 cuctemes geoup —_A 360° deguee weview of +he detail customer telahonship value ‘Lorth +he bank in teams No: oF loan amounts, deposit accounts, clepasit Values , outstancling Loan amounts . - This analysis can be cacsied cut qgainst move than 6S ciffecent custemss atbutes. a FE) Non- Peafsaming Assets CNPA) a = IF Aues in the fiom oF finch ond intesest pede qe Not! palcl by bosrowes feos a pesiod of 1¢0 days C aere4q — go days). Camiin hemroawen which hes bee al instihthon as se aiscehe in accemcluce secant bye bak “ADS oF clvanitvert Hnene Jeanctereet yetoabthial ow le: Ob os cats woh etixectin ‘nate leline relating Ae crsce)- Stoasiticertion. fantel be RAT.” *% As pes REV TMeame an leans IS to be rcennizect Suicdelinas ———r ean meceipt basic & fh bas nok beer CNPA) eeecevet Tho specified persioch - Ly SX BSnaine atth the tous pasion Pirspeses oF ~ OF @ RANKS loan profitability. 9) (7 Pouclenhial bes oh Nooms + Hels ersreash its cletesiasection ty 2) qesificeteen of Ac XA peepers system aunceme we cognition macle foe NPS helps_ in. -——- 2) pavvisten of eA Creefoomina) 4 Stamlasel_ C Eaeming) Assets + = Pees not camy any swisk = hme ask avocheat te hanking business = Stave ts ome BeResale Ws ea foals bas D preventative a Marnsement aE Management oF NPA curative = YD rebh Recovery QQ Meyagemant THitunels D Lok Acioles Clo tatkh) . @ Asst “occoniatalctimy @ cesperate tea ORR china ALI SES a RE a acer ae xk Pwucented EAR = ites one! ¢ “Weed tews Rice S a capijol '* capttal - Rick weahled Assefs + New puvede sector 10 7, - Insysance business 107 3) peposits 2 - = The liabiiity owned) by the banks to Tks clepositee 3. nok the finds cohich ame whowr as an asset oF the bank - = pepasiiwss ave the majos, Stakeheldess oF bank ~ — Deposit § Withdsawl ave economic Suostance % legal essence oF transactions - 3K_feahives 'oF — Poicty soft: — Higherr FD fos Deposit ——» — ~ Subject to contol of REE Lonses teem . - Intevest ate is payable ~ = Lo8es FD fos Swot teorn - IF +he deposit is Less - Bish Wauictiy - than G2 dexs the iniewest = Loans can be waised - vate paid on mehisily ov = The wades OF inteeesF cap quastesty > varies by REL - _* Types of bepesit ——” / i @_ savings: deposit Account ® cussert + 4) Recusring © ed © WRI CNon= Resident Indians) @ _ savings cepesit Account t 5 . a Recount peeved by man cae foo indiviuais te ove rosy § can eae inieresk on cash hed an the account: — These ave some zestvictions | fer. the account = Ho loan availability cCeg Gihasaary & Minimum account vequised . = mnt- vote iS rersinel Camiin @® curwent ———tho cepotilow can woithebmq/ ther Kamoy | cleposit ——r! yore hic eursirent: eecoun) wehenovens Account) ho mequinag (> = Mo intenessh = vere by basi PABEV ICD {ike No pectwiction on Ho» of eiraniny: & slopaait 2 _No_nesiafction on withebseaunt | + The bank catect woo T __skpodiie it an heraif oF ERSTE = Yeeres + : = The vale oF intesest wale is is highes | leRinfle cote = time / -teom ceposi+ + = Loon Facility. - Bntails penalty fie jntewesk — @ank can ler , Loans , iF withesaun egsiios . ‘As qusinessmen ~ funds oF banks - = 2s deduction emengehyy case + @_Recussing deposit _ opened fea pupa? 19 be seayee} Account ——> tO fuluroe + = is opened by Jose who Went to soe eoWlaaly fis a comtoin peaiod of Hime 3 easn high int. wode- = Min. © month — Maly. 1.0 = Highho an} waders © Mins Amounl Lo) “No WDithetsau) -' 1 = Loan Facithy. 1 frye years. @QA Ror C kerven on aereslnenf ) ¢ a = _ ROT mesiares cornpany's billy 40 provide ecwnings to its capthal, pawvidess wo ~_Measunes poorthebhiiray CE9- ERIT ) = The most “corpmanly usec] ROT melsies oe ROSIE) ROE, ROA’ Titheer orcas 10 mayfniae parm ene ranimnize cot, rraximize wehien 3 srectlewate echisns comin POT % mnibohves ——r - SHE - Bank Linkage 1992, - = Kisan ewedit cov | 1998 ~ KY C20Ds) 4 = Airancial: anclusion fund 5. FITFuyiiieu b FireuneP lit ty +he: psvcess of ensuaing access to ‘ conclusion nancial sesvices § Hinely , adequct= i coedit whese neececl by vulnesable Seoups © wjich as weskes sechons 4 lows : income groupe oct an offeedabe prices/ cost « 4 — rt is the delivesy of banking seevices ener oFfestiobe casks to the disadvantages! lo income groups - 7 — Ag the banking seovicas, qee in notre Woe public goods tt is essential thet availability of ‘banking 4 ; payment services to the ‘entize popwlechon Without discziminacthon . YD peoiding aqcess 4) Avallabiliy oF ii) cvedtt P42 Financial Fhancfal_pooducls counseling, 7 Seojicas & seoyices « Wend H ‘ i isoe Won, : 2% _RBT policy 7) = NO fils Account - Of financiol [77 - Kyo Nooms Fi : Inclusion J - Eneusing BeasmNckbe bank hoegeS , , LU 2% ‘Benefits ——y -sayes money, fosmal credit avenue) Piloctoje —-Alugi gaps & Leaks » t afl be fe sat ¥_Achieverrent —> 268/600. banking outlets ¢ 208) | 400 wisel beanches | =o) -millm basic saving sepssit jqecounbis sy tio Ske ~'4904 tekh -hronsacio - 1ADa ~ 3°42 _ million. Fasrm sede : rast > 2-8S milion Non- fas sector + X© Bank Spsead Management © spsead is ‘the diffetence’ bef” the interest wate chasged +o bossnwer 8 jintesest sate +5 deposttcs > pH = Spsecd management must pay sttahon to intesesk wate, __ odes, wt zis §& cehim on bank postfolfo oF assets - 1 = rt fecuses on epread bel? Gvesage yield From agsets’ & the aesage cost of Funds, ~ Respied (mostly to wale that bank could chazsge i 4 1 4 few loan b secusty investment - _ phases ; Sf Business ; CYele t= Recovery“ Prespesity Recession Pepressics Shoot ; Sem < | Inesedse = Encousage ~ Encousase =sell 1 Assets. SSesiBie Axed | Axed ree = Avoid Lean ~ wate) Locunt Fixed wake o% loans - Lash eed fean 7 1 Liabilities . gheouease = Encowege =shoot ~ 8 7 Bxed cost Shoo —teom, a5 SoG AOBIN SOuxced SOusced " . 4 Rar classes of products J fos Spread Management. I ASSAS OF comnescial Bank © @ Retail reonseee [@ Retail) maetgages Fessmo) C Axed /Pexible) abilities LOF pcommescay ¢ bank — ®DRetaly Shecking F ( Accoutt CB DATA @ cCaedit casd eeceiVobied Qe FS ep @ commevcial toans - — & Bods SS by ® long teem iovesimen peposis @® waded bonds § decivahe. © Pees Sean @@ 'cwedit f An) investigation core PORK pais Appoaisal befowe pervicling any loans & . advances clso cheeks +e Oe ea Ainopciel $ technical viebitiy of pow ject. proposed fs flinecling pattean & fuethes checks the peimasy & collate val _secusil7 fos secusily. of such, funds. “ The poocess by Which g lecclex appoaises the evedithsosthiness of the pwospectiye baswouer fs Known as ovecit+ appraisal” st Types oF 1) sesvice asedit 3= monthly payment Tez coedit ["@® Loans GRIRES @® installment coedit J @® coedif casds : a cvedit Appraisal @ credit Pancessing : Bveedit+ “Adimingy Process ——> yee + @weedit sacton / Approval ©Pisbuzsement - + 2 : i eu 6) credit decumentatin © Nonitozing 4 bel. * Benefits + — Reduces sisk- \ = Pappes assessment - — Reduces NPA 4 lose — — Inesease con cine: Bants_anvestment policy | + ' = Bonk may sell a govt secusit — settement Hl day = Bonk Receipt CBR) zerected on Hoe came .dey of aywestment- 1 > Beokesase on, Seah = Fee issue of ‘BR bank shud nates Z adopt format oF TBA — STRIPS, G-sec, SGLVBR- J SLR convestment — Cstoditmt ga, Mon - SLR: investments. ~centya} bank vequice ndess pHs) Invest in capital macker Maintain « postin of théls deal = Stocks bores > CP W liquid assef5 ) The paho|) = HS Sars en fune - Cash, gold, G-sec- er catty ~ Monetary tool. esu bods %f3) CAMELS: Approach t- 1 tes Se: - capital Adequacy, — Easning jernde ee ~ Asset Quality = Liquidi . ad- Aver ~_ Management - _systems. & conbols i] Capital Adequacy +- eae = The amount of capital holed by tne bank / financial instthitin to meet the demand of Arancial weguicies » RET tolels to held the some amaunt by the Ananciol Tnsttutom . CAR = Bank capiisl J Risk Weighted assels “= To ersuze “the peotecton oF depositors / Tnvestexs. = Gerth planning, econemic concentsation, "etc. E 2) Asset quality 3-207 f A — loons, investment, cash, a. sec» wefusns — Measuves bank -efmechyeness in. cemfniling J mattis = Gwss NPA cms Advance ~ 8) Management 3- 25 7/- ¢ = Mandsenantts capabniy to fdentfy pmneasuze 2 contyl IS = Response to changing masket >= — Policies/ guidelines = classi heaton F tems ——> y tah anni a - Asxoiment pis i —_ choi comcentaade gn jseeducts which pooide the 7 : biggest} ‘oeluens « , gt 1D “GCN teough Ara! pose ree cchepciog eh own ee wequived or wobethe » dersond , » : = peovieiea Somme compostie | measure of sue > frvertey aes Ateough' * DI sold » — chiy basic {ve eee C an hod - oni Sid ~ Rely fre clacsag “High alle —> salar Veieaias_gord , yb ing z low value —> povs soles 3 Toyente A Ue EN endese Uses Tags worn @ Nuttole Evaluahng YendonS uses q -wWeighté 7 Athibate Wesage scesé” fox each Metied Venclow : = The scoge is) based | 66 ‘ienp-! of ~ Nemious_fssye 4 Nendaoxs peafowmances Ton these issue ee = TNS Method is Similars to mult - cHtsibute /jappavach oF customess + + Develop Wst of issue —> Imp: oF weights —> Make Judgement —— a levelop Score. > Mighesk scawe - Sux R @®_ ar | Measuetng of - GMROE stock Transaction > -Re-oedes_pofnt Pesfosmance | ~ £O9 = Inyentsoy 7 Steck, Times = 7 Vinventssy casting cod . > Meekdoun Goode 7 i) GmRor t+ > < = Reiatvonchip ba Fal sales ,( he goss poort masgin,ete: oe Sv. Geess Masgin ' ‘y¢ Tums 1900 - +7. Gavss mMaszsgin |, 1 = Gross Masgin % x sales- to- Sixck tahoe. = cosh) wetal), tee J = cost of peddlucts pice of sell product, how fast sell pooduct « = GSwod indicator OF managers. peofrrmance- -_simple te elon 4 andesstand data cattechon 2357s Adeeb dddddddddddddddd ts i) Re-osdes point CHlhen to weosdes) 2- = usage sate x Lead t+me ~ systematically set stock levels at Which pecs ovders must be place} sucha stock level iS called Ie Pe-codes paint: USAGE Rade Lead '+ime ——> yee Safety et Sas peoiod from +he date an aces Stock Se clay amiin saad nnannn = auanttiz pee, osclet |) thal-) a minimises, the otal 1 cast of ry c4assing Here “Lcassying” costs I eoeltr amet casts ; ir roe iG Wow rch s Bcenamic . genaveles) Aes, y wu an ti" ty) losciorns ; cao cost a : oxelesing ast A aretestng cast ceosying cast 4}. : en ey aero a oR i ” f6- aoe cart Tl. = - > Holding invenhiry eT > Raseving a ecard Jy)_amventony / stocks Tumoyes Raho ye} shows the pelstionship berween cost oF goods sold 4 avesagse 3 inven Tasy . cost of gonds sold = Salel ~ Goss pmo Ao) Went. ANesage stocs = open Glock ++ closing Siscs a stock = Net _ sales 2 ‘ Tumoyes oathio Avg: stock | ne N) ch xreptwy cqoeying anventesy casoying COSF cose xX 106 pe Toto! Net sales Mi)> Martgel own Sords pescenrtage + - Melsdown croe SyPoploMS OF pom) 3, byying » adveolising » Store | lavauts ete. « = het sales at Reena! ; 4 Total Net calag an " Camiin” = Aled pom (Shr fook: Gn) Meeysuain 4 salee poe yroncr ian Sethe ng pom Lines fish 'oF ising Hele apace * Peoformeance = 6 depen = cneuinoney cool / oa. fe selling _ Avescad sanene}ien emer | —— i —— poe eq foot = total Nek eoles Jib) ceales pew Linear f space = = Uneae feck of ~ SheN TAR = pept- toro) Stowe toto! Pare se LON@Fi gale’ ner Soler PY) _accupaney cost 7 ioccupaney 6g: FL selling st fe Selling gl. f COSF = “Space Fv) Aleonge Ywonsacton Torel Sales = johal_No-oF 7 5% i Transachre ED) Gwoss | + selling - _ Masgin SPace - fot EV ]|_measueing , fa Narelaalisn = _Eroployce _ J = Sales Pow Feansackm - poocuctiv ity ———y _-_ Sale? per empryee — Gess Mazgin RetuTy wales _ Net salet on labous CGMRSL) Erm eyee aR fioyoe-_._GnaRo.s Saves Mersin - - FTE Employes, Chul Kme gaily : RNCOME Shalenenfe Balance sheel = cash Fou Glealement of | Retail > Finencicd Gtedement Analysic Retell Ace oe ee i) mcave Slalement 2+ apy is wecascl OF vevenves ectened | § expenses inareredl, SShapshek= of Companys opewalimnal pestosmance fos A pashculas pesd of me - Net sales , Goss profit, opssatng Spr | Components —Pr = ot fs financiol Srapshot of companks financial sHuation - Asses , Liobilives. Nek sscethy equi, ; debt, parable & wecelvabler = cash inflow C Revenue) G cash oulflow C ExpenSe) sive fee q given pestod OF Hrne- = cash Inflow exceeds outfiow —~ +VE cashFiow ~ cash outfew exceeds Thflaw —_> =ye, CaSn ROO ~ Xt Shows movement of cash- 2¥ components 82 _ cashflow fsor opesating .ackyihes 1 Lo mnvesting aches

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